For a hedged play on Hexcel (HXL), MarketIntelligenceCenter.com’s option-trade picking algorithms recommend the Sep. '15 $40.00 covered call for a net debit in the $38.70 area. That is also the break-even stock price for the covered call. This...

Option-trade picking algorithms patented by MarketIntelligenceCenter.com found a trading opportunity with Hexcel (HXL) that should provide a 3.71% return in just 67 days. Sell one Mar. '15 call at the $40.00 level for each 100 shares of Hexcel for...

Hexcel Corporation (NYSE: HXL)(Paris:HXL) announced today that it has acquired
50% of Formax UK Limited, a leading manufacturer of composite reinforcements,
specializing in the production of lightweight multi-axial fabrics. Formax is
located in...

A covered call identified by MarketIntelligececenter.com's patented algorithm on Hexcel (HXL) could yield about 3.36% (9.22% annualized, for comparison purposes only) in 133 days. Pair a long position in the stock with the Mar. '15 $40.00 call for...

WASHINGTON (dpa-AFX) - Hexcel Corp. (HXL) reported third-quarter net income
of $55.8 million or $0.57 per share, compared to $48.7 million or $0.48 per
share, last year. Adjusted net income was $56.1 million or $0.57 per share, for
the quarter. ...

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Hexcel (NYSE:HXL), is an advanced composites company that makes everything from skis to aircraft parts, and is one of the largest producers of carbon fiber in the US. Hexcel decided to focus exclusively on the advanced composites industry in 2007, and as such divested its ballistics, electronics, and architectural product lines to focus on carbon fiber products, a market that is expected to grow to nearly $10 billion in 2010.[1] Part of this potential is realized in the commercial aerospace market.

Ever since airlines suffered from $140 a barrel of oil in mid-2008, airlines have demanded more efficient aircraft to cope with rising fuel costs. As a result, the aerospace industry is becoming increasingly dependent on carbon fiber composites, which are lighter and stronger than conventional metals,[2] making them perfect materials for lighter, fuel-efficient jets. The increase in aerospace demand for composites is evident in the make-up of the latest aircraft models, like Boeing's 787 Dreamliner and Airbus's A350 XWB. Both models have about 50% of their weight content as composites.[3][4] At the end of May in 2008, Hexcel was awarded a contract to supply composite materials for A350 XWB aircraft through 2025.[5]

Company Overview

Hexcel is an advanced composites company that makes everything from recreational equipment like bikes and skis to aircraft, satellites, and wind turbine blades. The aerospace industry remains its most important customer, however, as half of all sales in 2009 were to the aerospace industry.[6] Other industries that HXL sells to include the Space and Defense industries as well as the general industrial marketplace.

Business and Financial Metrics

During 2009, HXL had total sales of $1.1 billion, a decline from the previous year of $1.3 billion.[7] The decline in sales in 2009 reflects the volume declines in Commercial Aerospace and Industrial markets. However, HXL was able to partially reduce the impact this had on its net earnings by also cutting its costs. As a result, HXL's net income declined from $111 million in 2008 to $56 million in 2009.[7]

Business Segments

Composite Materials (77.3% of net sales in 2009)

Hexcel produces its own carbon fiber, which is the main raw material for all its other products. At the end of 2009, Hexcel’s carbon fiber production capacity was 7000 tons.[8] In addition to carbon fiber, this segment of Hexcel also produces reinforcement fabrics, pre-impregnated materials, structural adhesives, and honeycomb structures. Applications for these products include skis, bikes, wind turbine rotor blades, aeroengines and yachts. In 2009, this segment earned $856.5 million in sales.[9]

Engineered Products (22.7% of net sales in 2009)

This segment of Hexcel produces composite structures and machined honeycomb that are used almost exclusively for aircraft structures and components. The primary end-uses for the products of this segment include wing panels, flight deck panels, helicopter blades, door liners, flaps, and wings. In 2009, this segment earned $251.8 million in net sales.[9]

Key Trends and Forces

Increases in the price of crude oil is driving up fuel prices. To make their products more fuel-efficient, manufacturers of planes and automobiles are turning to carbon composites as the alternative to traditional steel and aluminum parts.[10] Carbon composites are lighter and non-corroding,[11] which has led to the growth in the "Very Light Jet" market, which is trending toward all-composite airframes.

Very Light Jet" market

The Very Light Jet, or VLJ, is becoming an increasingly popular alternative for corporate fliers. The VLJ is half as expensive as the traditional corporate jet[12] and more cost-effective than commercial airlines because of lower fuel costs and the use of lighter composites materials.[13] The price of VLJs range from $1 to $3 million.[14] Although some manufacturers continue to use aluminum frames and composites for secondary structures, many others are proceeding to produce VLJs with all-composite airframes, expanding the market for carbon fiber materials (like those made by Hexcel).[14]

Hexcel benefits from the high price of carbon fiber

Due to strong demand from the aerospace industry[15], the price of carbon fiber has been rising.[16] In comparison, the price for aluminum is about $1.30 per pound.[17] However, comparisons by weight are misleading since carbon composites are 15 times stronger than aluminum.[18][19]

Since Hexcel produces its own carbon fiber, it is insulated from high prices and even benefits by selling carbon fibers that it does not use to third parties. While strong demand will drive prices up, it is also expected to drive increases in production, which will eventually bring prices back down. The output in 2010 is expected to be 53,000 tons.[20] In comparison, Hexcel has production capacity of 7,000 tons by the end of 2009.